[Congressional Record Volume 145, Number 114 (Thursday, August 5, 1999)]
[Senate]
[Pages S10363-S10366]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  THE FEDERAL RESEARCH INVESTMENT ACT

  Mr. KENNEDY. Mr. President, I welcome this opportunity to express my 
strong support for S. 296, the Federal Research Investment Act, which 
was introduced earlier this year by Senator Frist and Senator 
Rockefeller, and was reported favorably by the Commerce Committee 
earlier this month. This legislation is important for the future of the 
nation's economy and our competitive position in the global market-
place.
  A key ingredient in the continued success and growth of our economy 
is federal investment in research and development. Much of America's 
technological leadership today and in the past has been stimulated by 
federal R&D expenditures, and we need to continue to strengthen these 
investments as a top national priority.
  The results of this public-private partnership are all around us. 
They include the biotechnology industry, commercial satellite 
communications, integrated circuitry, the Internet, satellite-based 
global navigation and communications, and supercomputers.
  The Act calls for doubling the federal non-defense science budgets 
over the next eleven years. As a share of GDP, federal investment in 
R&D now stands at about half what it was 30 years ago. This share is 
projected to continue to fall under the current budget caps. Clearly, a 
strong commitment is needed for investment in R&D funding for basic 
sciences. Without a strong commitment, the worsening imbalance in R&D 
funding will have a negative impact on the economy and the nation's 
competitive position.
  I strongly support the effort to double the federal R&D budget. It is 
one of the most effective ways to ensure the continued prosperity of 
our nation. It is imperative that we continue making these investments 
which have made Massachusetts and many other states renowned for their 
innovative leadership. We must continue and enhance, not cut back, on 
these needed investments.
  I commend Senator Rockefeller and Senator Frist for their leadership 
and vision on this critical piece of legislation, and I urge my 
colleagues to join in supporting this important Act.
  Mr. ROCKEFELLER. Mr. President, I would like to join Senators Frist 
and Lieberman and other distinguished colleagues to commend the Senate 
for passing the Federal Research Investment Act. This legislation will 
set a long-term vision for federal funding of research and development 
programs so that the United States can continue to be the world leader 
in the research and innovation upon which our high-tech industry is 
based.
  One only needs to look as far as the front page of the newspaper to 
see the effect of high-technology on our country. New drugs are 
becoming available for fighting cancer; new communication hardware is 
allowing more people to connect to the Internet; and advances in fuel-
cell technology are leading to low-emission, high-efficiency 
alternative fuel vehicles. According to a 1998 National Science 
Foundation study, over seventy percent of all patent applications in 
America cite non-profit or federally funded research as a core 
component to the innovation being patented. Even at IBM, an industry 
leader in R&D, only 21 percent of its patent applications were based on 
company research. People are living longer, with a higher quality of 
life, in a better economy due to processes, procedures, and equipment 
which are based on federally funded research.
  New technologies and products do not appear out of thin air. They are 
the result of a basis of knowledge which has been built up by 
researchers supported by federal funding. American companies draw from 
this knowledge base in developing the high-tech products which you and 
I read about in the paper and see on our store shelves everyday.
  I view this knowledge base as an investment. The US government puts 
in modest amounts of funding in the form of support for scientific 
research. The dividends come from the economic growth which is produced 
as this knowledge is turned into actual products by American companies.
  A large part of the current rosy economic situation is due to these 
high-tech industries. High-tech companies are responsible for one-third 
of our economic output and half of our economic growth. Alan Greenspan 
has said that new technologies are primarily responsible for the 
nation's phenomenal economic performance, low unemployment, low 
inflation, high corporate profits and soaring stock prices. If we want 
continued economic growth, we therefore need to support the 
fundamental, pre-competitive research critical to these industries, at 
the necessary levels, and in a stable manner from year to year--and we 
need to do so now.
  Just three years ago, federal science funding was in a serious 
decline and fewer than half a dozen members of Congress gave it any 
attention. Now the connection between a healthy research enterprise and 
our nation's strong economic growth is widely understood. In the last 
two years the science budget has increased above inflation. In 
particular, for Fiscal Year 1999, an unprecedented 10 percent increase 
in civilian R&D funding was appropriated. Yet, somehow we appear to be 
once again in a situation where the future outlook for R&D funding is 
either declining, stagnating, or barely keeping pace with inflation. We 
must not only pass the Federal Research Investment Act, but we must 
continue

[[Page S10364]]

our fight to actually implement the R&D budgetary guidelines set forth 
in this bill.
  Finally, let me just say that one of the original reasons that I 
became involved in technology issues, such as the EPSCoR and EPSCoT 
programs, was because I believe that technology should be shared by 
everyone, not just those in Silicon Valley or the Route 128 corridor in 
Massachusetts. Therefore, this bill should be seen as a means of 
allowing for diversity in our national innovation infrastructure--
research must be allowed to flower in Montana, Alaska, West Virginia as 
well as the traditional centers of science.
  In conclusion, we have put together a long-term vision for federal 
R&D funding which we hope will lead to real increases in federal 
funding for research and development. Federally funded research has 
been, and will continue to be, a driving power behind our economic 
success. If we are to maintain and enhance our current economic 
prosperity we must make sure that research programs are funded at 
adequate levels in a consistent long-term manner.
  I thank my colleagues for their support of this bill and ask 
unanimous consent that both my comments and the news article from the 
Wheeling News-Register, ``Congress Must Act to Ensure That Vital 
Research Doesn't Lapse in U.S.,'' be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

        [From the Wheeling News-Register, Tuesday, May 11, 1999]

 Congress Must Act to Ensure That Vital Research Doesn't Lapse in U.S.

                  (By Erich Bloch and Charles M. Vest)

       Our nation is currently enjoying the longest period of 
     sustained economic growth since World War II. Much of this 
     growth is driven by competition and commercial reward for 
     innovative companies that use new technologies to develop new 
     products and services. These new technologies are possible 
     only because of the nation's investment in research. Basic 
     scientific and engineering research funded by the federal 
     government and conducted at America's public and private 
     universities is of particular importance. University research 
     led to the laser, fiber optics and the Internet, which make 
     the modern computing and telecommunications industries 
     possible. It also discovered recombinant DNA techniques that 
     have fueled the biotechnology industry, and made most of the 
     advances of modern medicine.
       The private sector also funds and conducts important 
     research. Indeed, in many instances it took both government 
     and industry funding to achieve the decisive result. The 
     private sector's primary function is to advance technology 
     and translate basic scientific knowledge into commercially 
     useful devices and systems. But here too, the federal 
     government has a critical role: it must provide a policy and 
     regulatory framework that encourages and rewards private 
     investment in research.
       Although nearly all analysts agree that our strong economy 
     is driven by research, we are not promoting and investing in 
     new research at an acceptable level, in either the public or 
     the private sector. This puts our future economy at 
     substantial risk. Despite Washington's proclivity for slowing 
     the growth of basic research funding, even in this time of 
     record economic growth and increased tax revenues, this risk 
     is being noted. Last year, for instance, both the House and 
     Senate took major steps towards addressing their obligation 
     in this regard.
       The House of Representatives, taking its lead from Rep. 
     Vernon Ehlers, a physicist and vice chairman of the Science 
     Committee, unanimously approved key principles for federal 
     involvement in science research. The Senate unanimously 
     passed a bill promoting federal investment in research and 
     development. These two congressional actions, together with a 
     host of independent reports on investment in research, 
     established a momentum that must be embraced and accelerated 
     by the new Congress.
       But Washington memories are short. Many a good idea has 
     gotten buried between the end of one Congress and the start 
     of a new one. Let's make sure this is not happening in this 
     case. Despite the pressure that balancing the budget puts on 
     Congress, we need to stay on the course that has proven to be 
     so effective.
       There is plenty of disagreement about the details of how 
     U.S. science and technology policy should move forward. 
     However, we wish to point to four recommendations of the 
     House Science Committee's report that are especially worthy 
     of strong bipartisan support in the 106th Congress.
       First, Congress should give high priority to stable and 
     substantial federal funding for fundamental scientific 
     research. Federal support of fundamental research has 
     declined as a percentage of gross domestic product during 
     this decade. It is both ironic and frustrating that our 
     research base has not benefitted from the very economic 
     expansion it helped to create.
       Second, the federal government should invest in fundamental 
     research across a wide spectrum of disciplines in science, 
     mathematics, and engineering. The seamlessness of science and 
     technology and the interrelation of their many fields are 
     demonstrated every day. For example, magnetic resonance 
     imaging devices (MRIs), which have become lifesaving 
     diagnostic tools in the medical professions, have their roots 
     in physics, chemistry, mathematics, and electrical 
     engineering.
       Third, an increased focus on partnerships is needed. 
     University-industry partnerships, government-industry 
     partnerships, and three-way efforts are required today 
     because of the complicated relationship between research and 
     the needs and constraints of each sector.
       Finally, the policy environment for research must be 
     improved. The Research and Experimentation Tax Credit must be 
     strengthened and made permanent. This credit has been on 
     again, off again during the past 15 years, despite its 
     effectiveness in stimulating private industry to invest in 
     R&D.
       At this point in the federal budget process, there is real 
     danger that an expanded federal commitment to scientific 
     research--a goal unanimously supported by Congress last 
     year--may fall victim to larger political battles. Congress 
     should ensure that R&D, especially fundamental research, 
     receives the priority it deserves and that partnerships 
     between government, academia, and the private sector are 
     given a chance to succeed.
  Mr. LIEBERMAN. Mr. President, I rise to praise S. 296, the Federal 
Research Investment Act of 1999, legislation designed to reverse a 
downward trend in the Federal Government's allocation to science and 
engineering research and development (R&D). S. 296 authorizes a 5.5% 
increase in funding per year for federally funded civilian R&D 
programs, through 2010. While the future of individual agencies, such 
as the National Institutes of Health or the National Science 
Foundation, remains with the authorizing committees, the bill 
establishes a long term commitment to sustaining the aggregate research 
and development portfolio during the annual budget cycle. The bill also 
puts in place a number of review and accountability measures to assure 
the public and Congress that, each year, the R&D funds are well spent. 
I am pleased to report that S. 296 passed the Senate last week, on July 
28, 1999, by unanimous consent. It had 41 cosponsors, about equally 
divided between the two parties, including the Majority and Minority 
leaders. The magnitude of support for this bill reflects the growing 
realization that technological progress is the single largest factor, 
bar none, in sustaining economic growth.
  Today we find ourselves in a ``New Economy.'' Everything about it 
defies conventional wisdom. Our unemployment rate is extremely low, but 
at the same time, our interest rates are low. The boom itself keeps 
going, defying expectations. In fact, the current economic boom is soon 
to be the longest one in our nation's history. Even our national debt 
has fallen far faster than economists had ever predicted it could. In 
retrospect, these happy miscalculations reflect a flaw in economic 
growth theory. Conventional economic wisdom at first underestimated the 
strength and depth of our New Economy because it ignored the 
substantial productivity gains generated by advances in technology, in 
this particular case, information technology. However, had we paid 
attention to history, we would have known better.

[[Page S10365]]

  Almost a dozen major economic studies, including those of Nobel Prize 
laureate Robert Solow, have tracked economic growth over prior decades. 
These studies found that in every time period studied, approximately 
half of all economic growth was due to technological progress. The 
preponderance of the evidence provided by these economic studies has 
led Alan Greenspan to note in many of his recent speeches that in 
addition to the traditional forces of labor and capital, a very 
substantial portion of economic growth is now recognized to be due to 
technological innovation and the productivity increases it brings to 
the workplace. That technological innovation is what is sustaining our 
boom today. Beyond the effects of interest rates and fiscal policy, 
there are the dot.com's and the gazelle stocks, pushing our nation's 
technological wunderkind into untold riches, and pulling the rest of 
the nation along with them.
  In an industrialized nation, the technological innovation so 
necessary for robust economic growth is generated by research and 
development (R&D). R&D is directly responsible for creation of the new 
products and processes which account for half or more of the growth in 
output per person, thereby fueling our economy. The private sector 
recognizes these connections--earlier this summer, Business Week 
devoted a entire issue, over a hundred pages, to highlighting the 
greatest scientific and technological innovations of the past 100 
years. As the noted economist Lester Thurow puts it, ``The payoff from 
social investment in basic research is as clear as anything is ever 
going to be in economics.'' To drive home the economic impact of 
scientific R&D, I would like to bring up the specific example of 
biomedical research, which at least one analysis finds has a rate of 
return that is greater than $13 for every dollar invested.
  This correlation between technology and economic growth is especially 
compelling today, and not just for the biomedical arena. On a local 
scale, scores of governors are striving to bring high tech corridors 
into their states. They know, intuitively, that future economic growth 
for their states depends on high tech. America's research-intensive 
industries have been growing at about twice the rate of the average 
economy over the past two decades. Job opportunities in information 
technology flood the newspaper want ads, an illustration of the 
Internet sector's 1.2 million new jobs in 1998. Moreover, high tech 
wages are 77% greater than the private sector average.
  However, we have reached a cross-roads in this era of technological 
growth. We must remember that the ultimate origins of today's high-tech 
companies, and hence the dramatic economic gains we now see, were a few 
seminal discoveries made in the mid-1960's. It was at that time that 
we, as a country, were seriously investing in research and development. 
Because of the 20-30 year time lag between basic scientific discovery 
and market product, that substantial federal investment is now bearing 
fruit in the form of our exceptionally robust economy in the 1990's.
  Unfortunately, since the mid-1960's we have not maintained our 
investment in R&D. As a fraction of the federal budget, the federal 
government's support of R&D has dropped by \2/3\ over the past 34 
years. When expressed as a fraction of GDP, federal funding of R&D has 
declined to half its mid-1960's value. For certain individual 
disciplines, the future is bleak. A recent report from the National 
Academy shows that in the years between 1993 and 1997, federal funding 
for research in mechanical engineering declined 50.4%, that for 
electrical engineering declined 35.7%, that for physics declined 28.7%, 
and that for chemical engineering declined 12.9%. These decreases are 
not just abstract reductions in facilities and personnel at research 
labs, and students and professors in universities. They represent the 
very seed corn of our economic prosperity. We no longer have as robust 
a pool of ideas to germinate into fundamentally new industries; we no 
longer have the technically trained populace capable of fully 
cultivating and implementing those ideas. Meanwhile, other countries 
are stepping in to fill the gap. Thirteen countries now have greater 
funding for basic research as a fraction of GNP than we do. For non-
defense research, Japan spends more than the US, even in absolute 
dollars.
  The problem of declining US R&D funding is especially acute, and 
demands action now, because of the dynamics of the global economy. In 
order to compete in the global economy, industry R&D funding has become 
overwhelmingly (84%) and increasingly concentrated on product 
development/refinement, i.e, the last stage of R&D. Thus, for new 
product concepts, industry is correspondingly more dependent on the 
basic and applied research sponsored by the government. The connection 
is a direct one. Currently, 73% of all papers cited in industrial 
patents are the product of government and non-profit funded research. 
With our declining investment in government-funded R&D, coupled with 
the increased appetite of industry for new market products and 
technologically literate workers, the government is stripping US 
industry of the knowledge base required to derive new products and 
compete in new industries.
  We must also understand that this falloff in R&D will have serious 
economic repercussions into the future. Our investments in science and 
technology have an impact which stretches out over a twenty to thirty 
year horizon. Recognition of this fact is particularly crucial because 
of the projected dramatic rises in entitlement spending when the baby 
boom generation retires. To pay for Social Security, for Medicare, for 
all the hopes and dreams of our country, we will need a healthy 
economic harvest in years to come. Increasing our commitment to R&D 
today is the surest way to provide for the robust economy that is 
essential to our future social commitments. As Judy Carter, President 
and CEO of Softworks, points out, ``Without a growing economy, 
Americans' standard of living, and our ability to support the needs of 
our aging population will be in jeopardy. Faced with a static or 
decreasing workforce as U.S. demographics shift, U.S. lawmakers must 
focus on encouraging technology development to increase productivity, 
enabling a smaller workforce to support a growing population of 
retirees.''
  We are doing well now economically because of our past R&D 
investments, but the declining R&D accounts bode poorly for our future. 
The Council on Competitiveness put it succinctly when it concluded, 
``the United States may be living off historical assets that are not 
being renewed.'' It is time now to renew those investments. With its 
small but steady increases in the nation's R&D accounts and its 
commitment to thoughtful planning and review of our R&D portfolio, The 
Federal Research Investment Act, S. 296, begins the replenishment of 
our consummate national treasure--our knowledge base.
  Mr. FRIST. Mr. President, I would like to take a few minutes to talk 
about an important, yet often ignored aspect of the federal budget--our 
investment in research and development (R&D). While I strongly believe 
that Congress must strive to stay within the budget caps, I also firmly 
believe that funding for R&D should be allowed to grow in fiscal year 
2000 and beyond. Many economists argue that such an investment, through 
its impact on economic growth, will not drain our resources, but will 
actually improve our country's fiscal standing.
  The Federal Research Investment Act, which I authored with Senators 
Rockefeller, Domenici, and Lieberman, passed the Senate last Monday for 
the second year in a row. the bill would double the amount of 
federally-funded civilian research and development (R&D) over eleven 
year period. This critical federal investment, performed throughout our 
national laboratories, universities, and private industry, is currently 
fueling 50% of our national economy through improvements in capital and 
labor productivity.
  Throughout my career in the Senate, I have spent a considerable 
amount of time advocating for greater funding levels for civilian R&D. 
Together with many of my colleagues from both sides of the aisle, I 
have been trying to educate others on the value of the federal 
government's role in funding merit-based and peer-reviewed programs. 
One only has to look at the Internet, the foundation of the new digital 
economy, to find an example of prudent federal investment in R&D.

[[Page S10366]]

  Current economic expansion and growth, however, cannot be maintained 
if we do not provide the necessary funds and incentives to perform 
critical R&D throughout the scientific disciplines. Federal 
expenditures of both civilian and defense R&D as a percentage of GDP 
have dropped from 2.2 percent in 1965 to only 0.8 percent in 1999--
nearly one third of its value.
  We have both a long-term problem: addressing the ever-increasing 
level of mandatory spending; and a near-term challenge: apportioning 
the ever-dwindling amount of discretionary funding. The confluence of 
increased dependency on technology and decreased fiscal flexibility has 
created a problem too obvious to ignore: not all deserving programs can 
be funded; not all authorized programs can be fully implemented. We 
must set priorities.
  The Federal Research Investment Act applies a set of guiding 
principles, established by the Senate Science and Technology Caucus, to 
consistently ask the appropriate questions about each competing 
technology program; to focus on that programs' effectiveness and 
appropriateness for federal funding; and to help us make the hard 
choices about which programs deserve to be funded and which do not.
  The Government plays a critical role in driving the innovation 
process in the United States. The majority of the federal government's 
basic R&D is directed toward critical missions to serve the public 
interest in areas including health, environmental pollution control, 
space exploration, and national defense. Federal funds support nearly 
60 percent of the Nation's basic research, with a similar share 
performed in colleges and universities.
  The Senate passage of the Federal Research Investment Act reflects a 
consensus that although basic research is the foundation for many 
innovations, the rate of return to society generated by investments in 
R&D is significantly larger than the benefits that can be captured by 
the performing institution.
  This legislation sends a strong message to the academic and 
scientific community--Congress understands the value of pre-
competitive, basis research and its impact on the national economy and 
the standard of living.
  I hope that the House will be as courageous as the Senate and embrace 
this long-term funding strategy.

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